CBAK Energy Technology, Inc. · NASDAQ:CBAT
CBAK Energy Technology — China BAK Battery — Investor Presentation (February 2007)
27 slides from CBAK Energy Technology's investor presentation, Feb 20, 2007
Slide 1: Investor Presentation February 2007
Jan Investor Presentation February 2007 a BAK
Slide 2: Forward-looking statements
This presentation includes or incorporates by reference statements that constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events or t
Slide 3: Investment Considerations
=4 Investment Considerations y One of the world’s biggest & fastest growing Li-ion battery cell manufacturers y Large & growing $2.5 billion Li-ion battery market y Expanding Li-ion product opportunities y Recurring revenue stream vy Low cost manufacturing y State-of-the-art technical capability y¥
Slide 4: Li-Ion Cell Market in China
Li-lon Cell Market in China i-lon cell/battery producers growing more rapidly in China than rest of of world ¥ Production shift of OEM's factories to Asia in general and China in particular ¥ Lower cost vs. Japan and Korea: manufacturing costs, logistics, import duty ¥ Replacement cell phone market
Slide 5: Li-ion versus other battery chemistries
Operating Voltage 1.2 1.2 Cycle Life 500 500 Rapid Charge Not Good Good Memory Effect Yes No Environmental Cadmium 5 None Impact (poisonous) Li-ion Batteries are the “defacto standard” in most applications due to higher power and longer duration . BAK
Slide 6: Li-ion battery applications
Notebook Computers | Digital J Cameras Bluetooth Headsets peas Hybrid-electric vehicles a A Uninterruptible Power —_Light-electrie vehicl MP3/Portable Entertainment Supply i Cordless power tools
Slide 7: Replacement Battery Market
, Replacement Battery Market » BAK has 60% share of this market y Provides recurring revenue stream y BAK's historical core business — Sales of steel and aluminum case battery cells to replacement battery manufacturers — These manufacturers, who sell under their own brand name or private-label brand
Slide 8: The "Razor Blade" Business Model
, The “Razor Blade” Business Model Lithium batteries are consumable products. More devices in use creates a recurring revenue stream along the lines of a “razor and razorblade” model ¥ Consumables are sold to the installed base ¥ Potential market expands at a geometric rate ¥ Stability; Predictabili
Slide 9: Sales to Mobile Phone OEMs
4 Sales to Mobile Phone OEMs y¥ The competitive environment — Product safety is the OEM’s primary concern. — Most OEM cells manufactured in Japan or Korea — BAK believes it has a significant cost manufacturing advantage over Japanese and Korean suppliers ¥ New Customers — BAK has announced a number
Slide 10: High Power Cells: Sales to A123
High Power Cells: Sales to A123 S$) v First high power cell application: DeWalt’s 36V line of power tools: “The power of corded without the cord” v Sales to A123 Systems 15% of Q1 2007 revenues v New high-powered battery products for applications in power tools, medical devices and hybrid electric v
Slide 11: High power cell commercial production
¥ Began commercial production in July 2006 ¥ Significant increase in manufacturing sophistication as compared to mobile phone cells ¥ Customers ~ Shenzhen Fonleate Electronics ~ In negotiations with several Tier 1 OEMs y¥ Production is currently 40,000 pieces per day ~> ~ ' BAK
Slide 12: Lithium Polymer Product Line
—-, Lithium Polymer Product Line ¥ Utilized for small-format batteries customized in size and shape for specific applications ¥ Current Capacity > 1 million pieces per month ¥ Current applications include: — MP3 players — Bluetooth headsets — Ultra light cell phones 12
Slide 13: Low cost manufacturing
actory structure combines automated and manual processes that utilize low cost Chinese cost labor — Automated equipment sourced in PRC and Taiwan — New equipment like slitters, electrode processing equipment, and winders that decrease cost, decrease process variability, improve product reliability a
Slide 14: World Class Technical Capability
World Class Technical bi Y BAK facilities meet or exceed international standards — EU and CE attestation, UL Authentication, |SO9001: 2000, 1S04001:1996 certified — Most advanced Li-ion research lab in China — State-of-the-art analytical equipment — Advanced automated model plant ¥ World class scien
Slide 15: 90-Acre industrial campus in Shenzhen
90-Acre industrial campus in Shenzhen including R&D center 1.9 million sq. ft. of manufacturing space 10,500+ employees New planned facility in Tianjin New R&D offices planned in central Shenzhen a EBAK
Slide 16: Distribution Channels
Distribution Channels Replacement Battery Manufacturers OEM (Original Equipment Manufacturer) Mobile Phones ¥ 60%+ Market Share ¥ Strong relationships with key battery pack manufacturers ¥ Growth catalyst. Organic growth with market ¥ Automated, process cortralled production capability established Y
Slide 17: Company Growth Plans
Company Growth Plans OEM (Original Equipment Manufacturer) Lithium ¥ Production capability established 2006 Polymer ¥ Growth catalyst: New customer development, continue to add manufacturing capacity Lithium Y Production established 2006 to supply A123 with nano lithium phosphate Phosphate based cel
Slide 18: Company Management
Company Management ir. Xiangqian Li, Chief Executive Officer — Founder provided initial capital of $2.4 million from personal funds — Fulltime, operating CEO v~ Dr Huanyu Mao, Chief Operating Officer — Significant expertise in Li lon technology: equipment, materials and production processes — Succes
Slide 19: Financial Overview
Financial Overview ‘ BAK
Slide 20: Revenue Growth
$160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 + 20 Revenue Growth In thousands of US Dollars $143,829 $101,922 $63,746 $43,082 $20,045 r 104 a FY 2003 FY 2004 FY 2005 FY 2006 = Q1FY 2006 Q1 FY 2007 For the fiscal years ended September 30 and the year- to-date period ended De
Slide 21: Gross profit growth
In thousands of US Dollars nee sue $36,000 $30,000 $25,687 $25,000 $20,000 $13,824 $15,000 $10,000 + gsi [ | $7,076 «$8,197 aa om so | FY 2003 FY 2004 FY 2005 FY 2006 Q1FY 2006 Q1FY 2007 For the fiscal years ended September 30 and the year- to-date period ended December 31. & B A K an
Slide 22: Net Income Growth
Net Income Growth In thousands of US Dollars $25,000 $20,165 $20,000 e008 $12,374 $10,000 a8 $5,000 + $3,704 $3,192 $3,583 »_— | FY 2003 FY 2004 FY 2005 FY 2006 Q1FY 2006 Q1FY 2007 For the fiscal years ended September 30 and the year- to-date period ended December 31. & B A K 2
Slide 23: Capital Structure
Capital Structure Shares Outstanding 48.9 million Float = 21 million Insider ownership 46% Institutional Ownership 69% 3 BAK
Slide 24: Income Statement
Income Statement Gross Profit $25.9 $39.6 Operating Income $15.5 $22.5 Net Income $12.4 $20.2 7 BE BAK
Slide 25: Shareholders' Equity
(USS in millions) 9/30/2006 12/31/06 Shareholders’ Equity
Slide 26: Investment Considerations
=4 Investment Considerations y One of the world’s biggest & fastest growing Li-ion battery cell manufacturers y Large & growing $2.5 billion Li-ion battery market y Expanding Li-ion product opportunities y Recurring revenue stream y Low cost manufacturing y State-of-the-art technical capability vy M
Slide 27: Safe Harbor Statement
Investor Presentation February 2007 [LOGO OF CHINA BAK BATTERY, INC.] [GRAPHIC APPEARS HERE] Safe Harbor Statement CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This presentation includes or incorporates by reference statements that constitute forward-looking statements within the meanin
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